Buyers Show the Money! Cash Sales Soar in 2014

It’s some of the sweetest news a seller can hear: there’s an offer on the table, and they’re paying cash. A cash sale means a quicker closing (no mortgage process to slow things down!) and drastically less chance of a contract falling through thanks to a low appraisal or financing snags. Buyers make out even better when they are able to buy a property outright: they take possession faster and start building equity on Day One, to say nothing of the tremendous advantage gained in negotiating power.

Land of the free, home of the flush: buyers are increasingly bringing cash to the table, which increases their negotiating power.

Of course, there are only so many buyers who can pull off a cash sale. Possessing sufficient liquid assets to buy a home is definitely the exception in real estate – just check out the average listing price (it’s Trulia, but you get the general gist) in several Center City neighborhoods as compared with the average household income of $92,457. And yet, cash is making a comeback. This week, RealtyTrac reported that national cash sales had hit a three-year high in the first quarter of 2014.

A full 42.7% of buyers paid cash on home sales in Q1 of 2014, compared with 37.8% in the last quarter of 2013 and just 19.1% in Q1 last year. It’s the highest percentage since RealtyTrac started logging cash sales in 2011. Pros attribute the trend to overall strict lending standards and low inventory in desirable markets – a combination that heavily favors investors, who generally come armed with scrilla. In some of the nation’s top metro areas (New York, Atlanta, Vegas), cash sales represent over half of all home purchases.

Interesting, the properties most likely to be paid for in greenbacks are those on the extreme polar ends of the pricing spectrum. It’s estimated that distressed homes account for around 25% of all cash sales – which makes total sense when one considers the likelihood that an investor is doing the buying. On the other hand, mega-luxe McMansions see a lot of cash sales as well, thanks to monied foreign investors and run-of-the-mill American bigshots having the assets on hand.

Not exactly flush? Don’t despair, dear buyer. Quick action, a competitive, attractive offer (backed by rock-solid pre-approval, obviously!), and willingness to grant seller concessions will, most of the time, still suffice to win you your dream home.